Sandy Stimpson's ties to conservative think tank could put him at odds with RSA, a big investor in Mobile

View full sizeThe Retirement System of Alabama's investments in Mobile have changed the city's skyline.

MOBILE, Alabama -- Mobile mayoral hopeful Sandy Stimpson’s ties to Alabama’s conservative political apparatus can be a blessing. They helped him raise $106,000 in March alone.

But they can also be a curse.

Take Stimpson’s ties to the Alabama Policy Institute, a conservative think tank based in Montgomery. Stimpson sits on the organization’s board and, for a time, was its chairman.

Over the years, API has been a vociferous foe of the Retirement Systems of Alabama, the state’s biggest pension manager. In particular, API has taken issue with RSA’s nontraditional investments in real estate and economic development across the state.

Normally such an esoteric dispute wouldn’t have much impact on a municipal election, but Mobile has benefited disproportionately from RSA largess. The pension manager has invested about $1 billion in the city over the last 20 years.

That puts Stimpson in an awkward position. While he was chairman at API in 2012, the organization published an article advocating against such investments, saying RSA should restrict its investments to more traditional vehicles like equities and bonds, which typically yield a higher return.

Stimpson said that, as chairman, he was aware of, but had no direct influence over, the articles and research done under his tenure. That being said, he was careful not to dismiss API’s criticisms, which he said are valid. If he were mayor, though, his first loyalties would have to be to the city, not pension reform.

Anybody who follows public pensions, knows that they need reform, Stimpson said, but “RSA has made a tremendous investment in Mobile and we need to do everything we can do to make sure those investments are successful … Whether it be RSA or any other investor, to me it doesn’t make any difference. When someone wants to make an investment in your city, you want to do your best to make sure they succeed.”

“Where they invest is their decision, if they want to invest in Mobile, that’s great,” Stimpson said.

Stimpson win would be 'ironic,' Bronner says

David Bronner, chief executive of RSA, said that it would certainly be ironic for Stimpson to take the helm of a city that has benefited so much from the very kinds of investments that API has seen fit to criticize.

Bronner said that a close working relationship with local government is a prerequisite for RSA to invest in a community. If Stimpson were elected and unwilling to cooperate, Bronner said, “We would just go on to some other place. You can’t fight city hall.”

API has been critical of RSA on a number of fronts, but the 2012 article took the pension fund to task specifically for its use of alternative investments like those it has made in the Mobile area.

Sandy Stimpson

The piece was largely a response to an RSA-commissioned study that touted the economic stimulus created by its alternative investments in Alabama. According to the study, the pension fund directed 10 percent of its investment portfolio, about $5.6 billion, in alternative investments between 1990 and 2011, resulting in a $28 billion economic expansion and $1.1 billion in additional tax revenue for the state.

The API report said that any massive investment in the economy will naturally have a stimulating effect. However, RSA’s primary mission is to maintain the fiscal viability of its pension funds, not stimulate the economy. RSA would have netted an additional $542 million for its pensioners had it directed its entire portfolio to more traditional vehicles such as equities and bonds, rather than setting aside 10 percent for alternative investments. The increased revenue could have been used to offset RSA’s unfunded liability, the article argued.

“While investments in Alabama are certainly appreciated, they have little to do with ‘safekeeping’ Alabama’s pensions by creating financial solvency for a broken retirement system, which is no longer sustainable in its current form.

Cameron Smith, API’s policy director and a coauthor of the article, said that neither Stimpson nor any of the board members had input into its critiques of RSA. Smith said that he keeps board members abreast of what he is working on, and they see research before it is published, but they do not have direct influence on his work product, he said.